Partnership Agreement

A partnership agreement is a legal document explaining in detail the terms and conditions of a working business relationship between partners. A partnership agreement outlines the parties’ duties, obligations, and contributions to a South Carolina partnership. A partnership agreement should cover all of the possible scenarios that a partnership could potentially face during the partnership’s lifespan. As a result, partnership agreements are frequently complicated and legal counsel is highly recommended in the process of drafting, negotiating, and reviewing a final version of the agreement.

The partnership agreement outlines the partners’ rights and responsibilities and covers how to go about a dissociation and dissolution of the partnership. In part, these provisions determine how partners can be taken out of the partnership and how assets and debts of the partnership would be distributed. If there is no partnership agreement, then South Carolina law and guidelines from the South Carolina Uniform Partnership Act will govern any dissolution.

A partnership agreement includes partners’ individual duties, obligations, and contributions and covers all possible scenarios that the partnership could face during the partnership’s lifespan.

Elements of a Partnership Agreement:

A partnership agreement includes the following elements and provisions: it sets out the name and address of the partnership and the partners; the duration of the partnership. Partners either choose a specific date of terimnation or include a general cancellation clause stating that the partnership will exist until all partners agree to dissolve it or until one of the partners dies. The agreement also states the purpose of the partnership and discloses financial information, like bank account information and what partners can sign checks on behalf of the partnership, as well as partners’ contributions and a valuation of all partners’ contributions like cash, property, and services. The agreement also outlines what the partners’ compensation will be and outlines how profits and salaries are to be distributed among them and management authority. For instance: what the partners’ operational responsibilities, decision-making abilities, voting rights are, what decisions require unanimous consent and how tie votes are to be resolved. A partnership agreement also states in what circumstances new partners would be allowed to join the partnership; work hours and vacation time; how to dispose of the partnership’s name in case a partner dies; how disputes will be resolved; and will include a buy-sell agreement.

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